GBP/USD. October 31st. The pound is still too weak
October 31, 2023 12:23 pm
On the hourly chart, the GBP/USD pair rebounded from the level of 1.2106 on Monday and rose to the level of 1.2175, from which there was also a rebound. However, at the moment, the pair has returned to the level of 1.2175. A new rebound from this level will work in favor of the American currency and lead to some decline towards 1.2106. If the pair’s exchange rate is consolidated above 1.2175, it will increase the probability of further growth towards the corrective level of 161.8% (1.2250).
The wave situation is currently quite ambiguous. Last week, we saw a strong downward wave that broke through the lows of the previous four descending waves. Consequently, the “bearish” trend has resumed. At the moment, an upward wave is forming, which has already broken through the last peak, so the trend has changed to “bullish” again. However, taking an overall look at the chart, it gives the impression of a horizontal movement. This means that trends can change quite frequently.
On Monday, there was no news background in the UK or the US. There won’t be any news today either, but the Federal Reserve’s meeting is scheduled for tomorrow, and the Bank of England’s meeting is the day after tomorrow. These two major events will be accompanied by important publications in the US on the labor market and unemployment. Therefore, there will be no time for boredom in the next few days. For the pound to move north, it needs strong data from the Bank of England and weak data from the Federal Reserve and the US in general. In the event of the opposite situation, I believe the trend will change back to “bearish.”
In general, the pound remains quite weak. The Bank of England needs to signal on Thursday its readiness to continue tightening monetary policy so that the bulls can become active again.
On the 4-hour chart, the pair rebounded from the corrective level of 50.0% (1.2289) and reversed in favor of the US dollar. A new decline began towards the level of 1.2035. Quotes closed above the descending trend corridor, but it remains very difficult to expect further growth in the pound. There are no new emerging divergences observed today with any of the indicators. A rebound of the pair’s exchange rate from the level of 1.2035 will allow us to expect a new rise in the pound.
Commitments of Traders (COT) report:
The sentiment among “non-commercial” traders in the latest report has become more “bearish.” The number of long contracts held by speculators increased by 1582 units, while the number of short contracts increased by 9009 units. The overall sentiment of major players has shifted towards “bearish,” and the gap between the number of long and short contracts is widening, but now in the opposite direction: 67 thousand versus 86 thousand. In my view, the prospects for further decline in the pound remain excellent. I still do not expect a strong rise in the British pound in the near future. I believe that over time, bulls will continue to liquidate their buy positions, as was the case with the euro.
News calendar for the US and the UK:
US – CB Consumer Confidence Index (14:00 UTC).
On Tuesday, the economic events calendar contains only one entry that is not of high priority for traders. The impact of the news on market sentiment for the remaining part of the day will be weak.
Forecast for GBP/USD and trader recommendations:
Selling the pound is possible today on a rebound from the level of 1.2175 on the hourly chart, with a target of 1.2106. Buys were possible on a rebound from 1.2106 with a target of 1.2175. This target has been reached. New buys should be considered upon closing above 1.2175 with a target of 1.2250.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair rebounded from the level of 1.2106 on Monday and rose to the level of 1.2175, from which there was also a rebound. However, at the moment, the pair has returned to the level of 1.2175. A new rebound from this level will work in favor of the American currency and lead to some decline towards 1.2106. If the pair’s exchange rate is consolidated above 1.2175, it will increase the probability of further growth towards the corrective level of 161.8% (1.2250).
The wave situation is currently quite ambiguous. Last week, we saw a strong downward wave that broke through the lows of the previous four descending waves. Consequently, the “bearish” trend has resumed. At the moment, an upward wave is forming, which has already broken through the last peak, so the trend has changed to “bullish” again. However, taking an overall look at the chart, it gives the impression of a horizontal movement. This means that trends can change quite frequently.
On Monday, there was no news background in the UK or the US. There won’t be any news today either, but the Federal Reserve’s meeting is scheduled for tomorrow, and the Bank of England’s meeting is the day after tomorrow. These two major events will be accompanied by important publications in the US on the labor market and unemployment. Therefore, there will be no time for boredom in the next few days. For the pound to move north, it needs strong data from the Bank of England and weak data from the Federal Reserve and the US in general. In the event of the opposite situation, I believe the trend will change back to “bearish.”
In general, the pound remains quite weak. The Bank of England needs to signal on Thursday its readiness to continue tightening monetary policy so that the bulls can become active again.
On the 4-hour chart, the pair rebounded from the corrective level of 50.0% (1.2289) and reversed in favor of the US dollar. A new decline began towards the level of 1.2035. Quotes closed above the descending trend corridor, but it remains very difficult to expect further growth in the pound. There are no new emerging divergences observed today with any of the indicators. A rebound of the pair’s exchange rate from the level of 1.2035 will allow us to expect a new rise in the pound.
Commitments of Traders (COT) report:
The sentiment among “non-commercial” traders in the latest report has become more “bearish.” The number of long contracts held by speculators increased by 1582 units, while the number of short contracts increased by 9009 units. The overall sentiment of major players has shifted towards “bearish,” and the gap between the number of long and short contracts is widening, but now in the opposite direction: 67 thousand versus 86 thousand. In my view, the prospects for further decline in the pound remain excellent. I still do not expect a strong rise in the British pound in the near future. I believe that over time, bulls will continue to liquidate their buy positions, as was the case with the euro.
News calendar for the US and the UK:
US – CB Consumer Confidence Index (14:00 UTC).
On Tuesday, the economic events calendar contains only one entry that is not of high priority for traders. The impact of the news on market sentiment for the remaining part of the day will be weak.
Forecast for GBP/USD and trader recommendations:
Selling the pound is possible today on a rebound from the level of 1.2175 on the hourly chart, with a target of 1.2106. Buys were possible on a rebound from 1.2106 with a target of 1.2175. This target has been reached. New buys should be considered upon closing above 1.2175 with a target of 1.2250.
The material has been provided by InstaForex Company – www.instaforex.com
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